Banco BPI is set to launch the first Portuguese benchmark covered bond since 2017 tomorrow (Friday), after having announced a mandate for a comeback EUR500m no-grow five year obrigações hipotecárias (OH), while KHFC is considering a new issue as debut deals in the pipeline near fruition.

The Portuguese mandate was announced today (Thursday), with Barclays, BPI parent CaixaBank, LBBW, Natixis and UniCredit names as leads for the new issue, which is expected to be rated Aa3/AA (low).

BPI has not issued a euro benchmark since January 2010, when it sold a EUR1bn five year at 62bp over mid-swaps.

The transaction will be the first Portuguese benchmark covered bond since Caixa Económica Montepio Geral sold a EUR750m five year in October 2017 at 65bp over mid-swaps. That came a month after Portugal was upgraded to investment grade by S&P, a move that was swiftly followed by a blow-out EUR1bn 10 year Banco Santander Totta OH.

Santander Totta April 2024 paper was quoted at an i-spread of 12bp, mid, according to pre-announcement comparables circulated by BPI’s leads today, while its September 2027s were at 32bp, Caixa Geral de Depósitos January 2022s at 20bp, and BCP May 2022s at 36bp. Parent CaixaBank January 2028s issued in January 2018 were at 32bp.

The most recent peripheral benchmark covered bond issuance was a EUR600m seven year OBG for BPER Banca on Monday that attracted around EUR3bn of demand, resulting in an increase to what had originally been a EUR500m “no-grow” deal.

Two debut euro benchmarks in the pipeline could emerge next week after roadshows.

Intesa subsidiary Všeobecná úverová banka (VUB) is expected to launch the first euro benchmark covered bond from Slovakia under a new covered bond law after next Monday concluding a roadshow that began yesterday (Wednesday). Banca IMI, Commerzbank, Deutsche, Erste and LBBW have the mandate for an intermediate maturity deal with an expected rating of Aa2.

Danish Ship Finance (Danmarks Skibskredit) has this week been roadshowing an inaugural, EUR500m three and a half year benchmark. ABN Amro, Danske, LBBW and UniCredit have the mandate for the deal, which is expected to be rated A by S&P.

Korea Housing Finance Corporation (KHFC) could launch a new covered bond after having mandated BNP Paribas, DBS, ING and SG for a potential issue. Having previously been active in US dollars, the South Korean issuer launched the first Korean euro benchmark in October, a EUR500m five year deal that was also the first green or social covered bond from Asia.

OMA Savings Bank will on Monday begin a roadshow for the latest Finnish sub-benchmark, with Danske, LBBW and OP mandated.

Compatriot Alandsbanken on Tuesday issued a EUR300m five year at 13bp over mid-swaps, in the middle of guidance, via BNP Paribas, Danske and UniCredit.

The deal was only just subscribed, according to a banker at one of the leads. This contrasted with the success of a EUR300m seven year deal for the Mortgage Society of Finland on Wednesday of last week, which was twice-subscribed and priced at 15bp following initial guidance of 19bp. The lead banker on Alandsbanken’s trade suggested that the main difference between the two was the market’s reaction to the dovish ECB meeting last Thursday, which depressed yields, making the five year maturity potentially even less attractive than the Mortgage Society’s seven years.